Alaris Royalty Corp. Releases 2012 Financial Results

NOT FOR DISSEMINATION IN THE UNITED STATES. ANY FAILURE TO COMPLY WITH THIS RESTRICTION MAY CONSTITUTE A VIOLATION OF U.S. SECURITIES LAW.

Alaris Royalty Corp. (TSX:AD) ("Alaris" or the "Corporation") today announced its results for the year ended December 31, 2012. The results are prepared under International Financial Reporting Standards ("IFRS") as issued by the International Accounting Standards Board ("IASB").

2012 was a another significant year for the Corporation as it continued to focus on five main "pillars" aimed at providing a more secure dividend stream to Alaris shareholders. They are as follows:

Diversification

Added two new Partners, Labstat International Limited Partnership ("Labstat") in June and Agility Health LLC ("Agility") in December.

Growth

The addition of Labstat and Agility provided for growth to Alaris' net cash from operating activities.

The Corporation completed follow-on contributions into KMH Limited Partnership ("KMH") in November and December and Killick Aerospace Limited Partnership ("Killick") in December.

Alaris increased its monthly dividend twice for a total increase of 10.5% and provided a total annual return to shareholders of approximately 40%.

Reducing Volatility

The Corporation negotiated collars on the maximum increase or decrease of the annual distributions from Labstat and Agility.

The Corporation realized organic growth from current Partners of 2.2%.

Visibility

Revenues from the Corporation's ten partners for 2013 are already determined.

The Corporation has predictable and low general and administrative expenses.

Liquidity

The Corporation's float increased by 18% in 2012 and daily trading volume continues to grow.

The Corporation's focus on these five pillars translated into partner revenues for the year ended December 31, 2012 increasing 49% to $32.1 million from $21.5 million in 2011. The increase was due to the addition of three new private company partners in the past thirteen months (Quetico LLC in December 2011 and Labstat and Agility in 2012) as well as follow on contributions in KMH and Killick.

For the year ended December 31, 2012, the Corporation recorded earnings of $18.0 million and EBITDA and Normalized EBITDA of $25.9 million, compared to earnings of $34.7 million, EBITDA of $43.8 million and Normalized EBITDA of $16.1 million in the prior year. The increase in Normalized EBITDA in the current year is due to having a full year of revenues from Quetico and a half year from Labstat, along with increased revenue from KMH due to follow on contributions. EBITDA and earnings decreased compared to 2011 as the Corporation recorded a significant gain on the reduction of the Corporation's financial interests in LifeMark Health Limited Partnership ("LifeMark") and MEDIchair Ltd ("MEDIchair").

"2012 was another excellent year for Alaris and its shareholders. We were able to increase our dividend twice in the year as we added great new partners in established and profitable businesses with high quality management teams; and contributed more capital into current partners who have been performing well. We funded our growth with successful bought deal financings in June 2012 and again in January 2013, and have a balance sheet that has us well positioned for further successes in 2013" said Stephen King, CEO, Alaris Royalty Corp.

Reconciliation of Earnings to EBITDA
(thousands)

Dec 31, 2012

Dec 31, 2011

Earnings

$18,036

$34,712

Adjustments to Earnings:

Amortization

108

143

Interest

1,033

1,235

Deferred income tax expense

6,688

7,729

EBITDA

$25,865

$43,819

Normalizing Adjustments:

Gain on reduction of LifeMark interest

-

23,816

Gain on sale of intangible assets

-

3,892

Normalized EBITDA

$25,865

$16,111

Outlook

Alaris' agreements with its partner companies (its "Private Company Partners") provide for estimated revenues to Alaris of approximately $44.7 million for 2013. Revenues from our Private Company Partners for the three months ended March 31, 2013 are expected to be $10.8 million. The Corporation has $36 million remaining on its $50.1 million credit facility for use in future transactions. General and administrative expenses are currently estimated to be $4.0 million for 2013, inclusive of all public company costs. Cash requirements after earnings are expected to remain at minimal levels.

The Consolidated Statement of Financial Position, Statement of Comprehensive Income, and Statement of Cash Flows are attached to this news release. Alaris' financial statements and MD&A will be available on SEDAR at www.sedar.com and on our website at www.alarisroyalty.com.

An updated corporate presentation is available on the Corporation's website.

About the Corporation:

Alaris provides alternative financing to the Private Company Partners in exchange for royalties or distributions with the principal objective of generating stable and predictable cash flows for dividend payments to its shareholders. Royalties or distributions from the Private Company Partners are structured as a percentage of a "top line" financial performance measure such as gross margin and same-store sales and rank in priority to the owners' common equity position.

Non-IFRS Measures

The terms EBITDA and Normalized EBITDA are financial measures used in this news release that are not standard measures under International Financial Reporting Standards ("IFRS"). The Corporation's method of calculating EBITDA and Normalized EBITDA may differ from the methods used by other issuers. Therefore, the Corporation's EBITDA and Normalized EBITDA may not be comparable to similar measures presented by other issuers.

EBITDA refers to net earnings (loss) determined in accordance with IFRS, before depreciation and amortization, net of gain or loss on disposal of capital assets, interest expense and income tax expense. EBITDA is used by management and many investors to determine the ability of an issuer to generate cash from operations. Management believes EBITDA is a useful supplemental measure from which to determine the Corporation's ability to generate cash available for debt service, working capital, capital expenditures, income taxes and dividends. The Corporation has provided a reconciliation of net income to EBITDA in this news release.

Normalized EBITDA refers to EBITDA excluding items that are non-recurring in nature, such as gains on the reduction of interests in Private Company Partners.

The terms EBITDA and Normalized EBITDA should only be used in conjunction with the Corporation's annual audited and quarterly reviewed financial statements, excerpts of which are available below, while complete versions are available on SEDAR at www.sedar.com.

Forward-Looking Statements

This news release contains forward-looking statements under applicable securities laws. Statements other than statements of historical fact contained in this news release are forward-looking statements, including, without limitation, management's expectations, intentions and beliefs concerning the growth, results of operations, performance of the Corporation and the Private Company Partners, the, the future financial position or results of the Corporation, business strategy, and plans and objectives of or involving the Corporation or the Private Company Partners. Many of these statements can be identified by looking for words such as "believe", "expects", "will", "intends", "projects", "anticipates", "estimates", "continues" or similar words or the negative thereof. In particular, this news release contains forward-looking statements regarding the anticipated financial and operating performance of the Private Company Partners in 2013, the revenues to be received by Alaris and its general and administrative expenses in 2013, and the cash requirements of the Corporation in 2013.

By their nature, forward-looking statements require Alaris to make assumptions and are subject to inherent risks and uncertainties. Assumptions about the performance of the Canadian and U.S. economies in 2013 and how that will affect Alaris' business and that of its Private Company Partners are material factors considered by Alaris management when setting the outlook for Alaris. Key assumptions include, but are not limited to, assumptions that the Canadian and U.S. economies will grow moderately in 2013, that interest rates will not rise in a material way over the next 12 to 24 months, that the Private Company Partners will continue to make distributions to Alaris as and when required, that the businesses of the Private Company Partners will continue to grow, that the Corporation will experience positive resets to its annual royalties and distributions from its Private Company Partners in 2013, more private companies will require access to alternative sources of capital, and that Alaris will have the ability to raise required equity and/or debt financing on acceptable terms. Management of Alaris has also assumed that capital markets will remain stable and that the Canadian dollar will remain in a range of approximately plus or minus 5% of par relative to the U.S. dollar. In determining expectations for economic growth, management of Alaris primarily considers historical economic data provided by the Canadian and U.S. governments and their agencies.

There can be no assurance that the assumptions, plans, intentions or expectations upon which these forward-looking statements are based will occur. Forward-looking statements are subject to risks, uncertainties and assumptions and should not be read as guarantees or assurances of future performance. The actual results of the Corporation and the Private Company Partners could materially differ from those anticipated in the forward-looking statements contained herein as a result of certain risk factors, including, but not limited to, the following: the dependence of Alaris on the Private Company Partners; reliance on key personnel; general economic conditions; failure to complete or realize the anticipated benefit of Alaris' financing arrangements with the Private Company Partners; government regulations; and risks relating to the Private Company Partners and their businesses. Additional risks that may cause actual results to vary from those indicated are discussed under the heading "Risk Factors" in the Corporation's Annual Information Form for the year ended December 31, 2012, which is filed under the Corporation's profile at www.sedar.com. Accordingly, readers are cautioned not to place undue reliance on any forward-looking information contained in this news release. Statements containing forward-looking information reflect management's current beliefs and assumptions based on information in its possession on the date of this news release. Although management believes that the expectations represented in such forward-looking statements are reasonable, there can be no assurance that such expectations will prove to be correct.

Alaris Royalty Corp.

Consolidated statement of financial position

December 31

December 31

2012

2011

Assets

Cash and cash equivalents

$3,638,255

$3,888,465

Prepayments

182,811

119,508

Trade and other receivables

3,417,642

3,443,679

Current Assets

7,238,708

7,451,652

Promissory note receivable

1,250,000

-

Equipment

59,881

66,743

Intangible assets

6,570,201

6,661,138

Preferred LP Units

298,226,402

207,408,290

Investment tax credit receivable

10,922,393

10,922,393

Deferred income taxes

8,673,125

13,967,984

Non-current assets

325,702,002

239,026,548

Total Assets

$332,940,710

$246,478,200

Liabilities

Accounts payable and accrued liabilities

$1,805,561

$1,546,705

Dividends payable

2,345,347

1,850,145

Income taxes payable

40,585

67,590

Current Liabilities

4,191,493

3,464,440

Loans and borrowings

50,000,000

6,500,000

Non-current liabilities

50,000,000

6,500,000

Total Liabilities

$54,191,493

$9,964,440

Equity

Share capital

252,016,172

$200,822,160

Equity reserve

2,930,483

4,626,500

Fair value reserve

2,336,689

2,292,939

Translation reserve

(265,220

)

(124,947

)

Retained earnings

21,731,093

28,897,108

Total Equity

$278,749,217

$236,513,760

Total Liabilities and Equity

$332,940,710

$246,478,200

Alaris Royalty Corp.

Consolidated statement of comprehensive income

Years ended Dec 31

2012

2011

Revenues

Royalties and distributions

$32,089,405

$21,497,960

Interest and other

16,509

68,408

Gain on reduction of partner interests

-

23,815,973

Gain on sale of intangible assets

-

3,891,560

Total Revenue

32,105,914

49,273,901

Salaries and benefits

1,796,174

1,875,508

Corporate and office

971,072

859,727

Legal and accounting fees

1,330,689

556,621

Non-cash stock-based compensation

1,901,683

1,978,727

Depreciation and amortization

107,633

143,244

Subtotal

6,107,251

5,413,827

Earnings from operations

25,998,663

43,860,074

Finance costs

1,033,392

1,235,348

Unrealized foreign exchange loss

241,794

183,060

Earnings before taxes

24,723,477

42,441,666

Deferred income tax expense

5,978,701

7,661,200

Current income tax expense

709,173

68,022

Total income tax expense

6,687,874

7,729,222

Earnings

18,035,603

34,712,444

Other comprehensive income

Net change in fair value of Preferred LP units

50,000

1,093,437

Tax impact of change in fair value

(6,250

)

(136,679

)

Realized gain on reduction of partnership interest

-

(24,015,973

)

Tax impact of realized gain

-

3,001,997

Foreign currency translation differences

(140,273

)

(124,947

)

Other comprehensive income for the year, net of income tax

(96,523

)

(20,182,165

)

Total comprehensive income for the year

$ 17,939,080

$ 14,530,279

Earnings per share

Basic earnings per share

$0.86

$2.04

Fully diluted earnings per share

$0.84

$1.97

Weighted average shares outstanding

Basic

20,934,899

17,036,346

Fully Diluted

21,475,993

17,595,740

Alaris Royalty Corp.

Consolidated statement of cash flows

Years ended Dec 31

2012

2011

Cash flows from operating activities

Earnings from the year

$18,035,603

$34,712,444

Adjustments for:

Finance costs

1,033,392

1,235,348

Deferred income tax expense

5,978,701

7,661,200

Depreciation and amortization

107,633

143,244

Gain on sale of intangible asset and reduction of partner interests

-

(27,707,533

)

(Gain)/Loss on foreign exchange forward contract

3,750

(21,864

)

Unrealized foreign exchange loss

241,794

183,060

Non-cash stock-based compensation

1,901,683

1,978,727

27,302,556

18,184,626

Change in:

-trade and other receivables

26,037

(2,755,165

)

-prepayments

(63,303

)

223,676

-trade and other payables

231,851

192,303

Cash generated from operating activities

27,497,141

15,845,440

Finance costs

(1,033,392

)

(1,235,348

)

Net cash from operating activities

$26,463,749

$14,610,092

Cash flows from investing activities

Acquisition of equipment

(9,835

)

(12,979

)

Acquisition of Preferred LP Units

(91,141,585

)

(78,948,286

)

Proceeds from sale of intangible asset and reduction of partner interests

Conditions for using this site

Alaris Royalty Corp. (“Alaris”) maintains the internet site as an informational service. This site is not intended to supplement or substitute for the legal disclosure for Alaris or for the prospectus disclosure related to a public offering of any of its securities in Canada. Please read the legal notice on the site before you proceed.

Your use of this site is in itself acceptance of the terms and conditions regarding use as stated in the Legal Notice.

U.S. Ownership and Trading Restrictions

To ensure compliance with U.S. securities laws, Alaris’ common shares are subject to a number of ownership and transfer restrictions. Purchases of Alaris common shares are permitted only by non U.S. persons, and in certain private placements to U.S. persons who are “Qualified U.S. Purchasers” and who are not “ERISA Persons”. Information concerning these ownership and transfer restrictions is included in the Investor section of this website under “Ownership and Transfer Restrictions - U.S. Persons.”

The information in this website does not constitute an offering for the sale of securities in the United States. Securities may not be offered or sold in the United States absent registration or an exemption from registration under the Securities Act of 1933, as amended, and the Investment Company Act of 1940, as amended..

Use of cookies

When you click Agree below, a small amount of data ("a cookie") will be written to your browser, which will enable you to review information contained on this website. The cookie is valid for two days after which you will be again prompted to accept the website legal notice. The use of cookies is very common on commercial websites and web browsers normally accept cookies. If you have turned this function off in your browser's preferences, you will need to turn it on to gain access to this portion of our website. Alaris Royalty Corp. respects your privacy and no personal information is collected or stored as part of this process.